Caution: Trading involves the possibility of financial loss. Only trade with money that you are prepared to lose, you must recognise that for factors outside your control you may lose all of the money in your trading account. Many forex brokers also hold you liable for losses that exceed your trading capital. So you may stand to lose more money than is in your account. HowToTrade.com does not guarantee the profitability of trades executed on its systems. We have no knowledge on the level of money you are trading with or the level of risk you are taking with each trade. You must make your own financial decisions, we take no responsibility for money made or lost as a result of using our servers or advice on forex related products on this website.
Expand Offer

Save $228 on our Trade Together program, paid for by our partner.

Learn More

Save $228 on our Trade Together program, paid for by our partner.

Learn More

Natural Gas Retraces Ahead Of EIA Inventories

  • 3 mins read ●
  • Published:
natural gas market analysis 3

Key Points

  • Natural gas is currently pulling back from six-session highs.
  • Prices have plunged from 2022 peaks and remain in a severe downtrend.
  • Spring/summer seasonality may have already begun.
  • Thursday’s EIA NG underground storage report will bring significant volatility to the market. 

Beginning with Russia’s invasion of Ukraine, natural gas (NATGAS, NG) has been one of the most challenging markets to trade. Manic highs and lows have become the norm for NG, frequently confusing energy traders.

Currently, NG is trading higher on the back of a six-session winning streak. At press time, the tides have turned; prices are off more than 4% on heavy shorting.

Is Selling Season Upon Us?

Conventional wisdom says that the spring and summer months in the Northern Hemisphere are the selling season for natural gas. Why? Reduced consumption, specifically for heating purposes. Natural gas is a commodity, which means the supply/demand dynamic has a huge bearing on pricing. Generally, when supplies fall, prices rise; when supplies rise, prices fall.

For instance, US NG storage levels are typically highest between the end of October and mid-November. This suggests that consumption lags in the summer months, allowing NG stocks to grow. The result is often depressed spring/summer futures and spot market pricing. 

Events & Market Drivers

With May rapidly approaching, several market drivers are poised to impact natural gas. First, spring/summer seasonality has the potential to put a ceiling on prices. Although consumption was at record levels in 2023, trends tell us it has a good chance to tick down in the coming months. If correct, lagging consumption is a bearish market driver. 

Second, geopolitics. Since March 2022, natural gas has been in a bear market. Prices have fallen dramatically from Russia/Ukraine panic highs, plunging to post-COVID lows. However, the market has seen a surge over the past week amid Israel/Iran escalation. Any major escalation is likely to boost NG prices, at least on an intraday scale.

Trading The Natural Gas “Middle”

Since the chaos of Tuesday, 16 April, NATGAS has been on a significant bull run. As pictured on the chart (Pepperstone, Spot NATGAS CFD), the price has rebounded from a hard test of the 1.600 natural support zone.

NATGAS, DAILY, 24 APRIL 2024

The long-term trend is still exceedingly bearish, but prices are approaching an established support area between 1.562 and 1.613. If nothing else, bidders have repeatedly defended these sub-2.000 levels over the past six weeks. 

On the daily chart, the current 62% Fibonacci Retracement (1.719) and 78% Fibonacci Retracement (1.673) are positive bullish entries. These deep retracement levels target the “middle” of the daily trend’s range. Preference is given to the 78% retracement level as it falls closer to 1.600 natural support.

For natural gas traders, Thursday’s EIA storage report is worth noting. This event typically brings huge participation and can sway the NATGAS market dramatically. If you’re trading NG, mark this event on your economic calendar.

Related Articles:


Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.

Trade Like a Predator Hunt for Opportunities

Sign up now for FREE access to our exclusive trading strategy videos. Want more? Explore our Trade Together program for live streams, expert coaching and much more.

Here’s what you’ll get:

Identifying high probability scalping setups
When to scalp and when to stay out
Precise entries and exits
Position sizing and risk management
HTT Piranha Strategy Course thumbnail
By clicking the 'Learn Free Now' button you agree to our Terms of Service and Privacy Policy
HTT Connor, arms crossed

In partnership with our recommended partner SwitchMarkets partnering broker logo

Wait!

1Register with Switch Markets.
2Verify your identity.
3Unlock Trade Together program for free!
Learn More

"Join our Trade Together program and interact with us in real-time as we trade the markets together."

HowToTrade Coaches